Should I close my bank accounts and switch to Chime to get a hold on my finances?

Submitted by fishonthesun t3_11e4ixa in personalfinance

TLDR; due to mental & physical health limitations, I have ~3.2k CC debt and my credit score consistently goes down. Will closing my 3 bank accounts and consolidating to Chime actually help me rebuild my credit, pay down debts, and actually build savings like their ads claim?

Post:

I'll try to give context as concisely as possible.

I have no savings. I had to spend the $1.6k I had invested to move out ASAP when my ex broke up with me.

I make $19 an hour, eventually this will be $20 an hour.

My rent is $937/month.

I've never had to pay for my own heating before- I'm still figuring out how to manage not freezing (I have a circulatory disorder so I don't want numb hands and feet in my apartment) and not paying more than I can afford. I'm on track for $110 this month and this will go down as it gets warmer. I live in MI so it's been very cold lately.

I have a second job that allows me to work on my own schedule. Due to endometriosis, narcolepsy, and coming out of a bipolar depressive episode, I have low energy and don't do this second job often. I barely bring in $100/week with it.

My health issues are being managed, and unless they flare up dramatically, my energy levels will improve and I'll be able to do my 2nd job more, and can expect to bring in ~$250/week with it.

So, all that being said, I have ~3.2k credit card debt, ~$20k student debt, and ~13.5k left on my car loan. Student loans and car loan payments I always make on time, but my credit card payment... I can barely afford minimum payments on it and many months I can't even afford that. My credit card debt goes up each month because it's maxed out and I have late fees. It's maxed out because I used to have a job paying $15/hour and I had to use my CC for EVERYTHING. Plus I had a bipolar manic episode and ~1k of my debt is from me overspending with the mindset of "it'll all work itself out." I've improved that mindset massively in therapy and most of the time can resist both impulse purchases and non-necessary, low-cost purchases.

I have 3 bank accounts and I feel like if I closed them and consolidated to 1, I'd be able to manage my money better. My big question is: will Chime actually help me recover my credit score and pay down my debts more easily? My credit score used to be 735 as a 23 y/o but now it's 666 due to missing CC payments. It causes me a lot of mental anguish, to be frank.

Anyways, thank you so so much to anyone who reads all of this!

P.S. I used to be very good at saving money, before my first bipolar manic episode. I'm very embarrassed by how my mental illness has affected my ability to care & provide for myself. Please be kind and understanding, I'm doing my 100% best to get a hold on things; I just think my efforts may be directed in the wrong ways and am looking for guidance on if I should redirect them in the stated way.

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yes_its_him t1_jacbqgf wrote

You wouldn't expect those things to happen just from changing banks. Their ads are probably overselling what benefits you will receive.

There's probably not much downside to doing this, but just don't expect major changes as a result.

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BogBabe t1_jacfgvs wrote

There's nothing magical about Chime. You need to increase your income and/or decrease your spending to pay down your debts and start saving money.

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fishonthesun OP t1_jacklp5 wrote

Okay, damn. I was really hoping Chime would at least be helpful. As I said in my post, I'll be able to pick up more hours as time goes on, and I'm working hard on reducing spending. Thanks!

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BogBabe t1_jacppms wrote

Well, Chime can't conjure up money out of nowhere, nor can it make decisions about your spending or saving, nor can it increase your income or pay your debts for you.

It's possible that you might be able to get a better handle on your finances if you have everything all in one place — but again, there's nothing magical about Chime in that regard. You could just as easily open a checking account, savings account, and credit card account at any bank.

Have you tracked your expenses for any period of time to get a handle on where your money's going? Have you made up a budget for yourself to govern your spending? Doing the hard work of getting your finances under control is on you, and Chime can't do it for you.

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fishonthesun OP t1_jacwqke wrote

I thought I was doing a good job tracking my money spending but after a couple months of asking "where tf is my money going" repeatedly, I've started collecting receipts.

As far as splitting paychecks between multiple accounts, that hasn't been going well- not enough put into one account to pay 'x' bill, not enough in the other account to cover that bill plus other bills, etc., so I think having a checking and a savings at one bank would be helpful. No more transferring from one bank to another and waiting 5 days for it to arrive. That's made me late on a payment twice now.

As far as budgeting, it's difficult when my second job doesn't bring in the same amount each week, and since I choose my schedule day-of working, and each order pays a different amount, there isn't a way to plan that out. Although, I could set a budget as though I only have one job. That might make saving easier, too. Any extra from the second job could go straight to savings since I wouldn't be relying on it for bills.

Thanks for the comment, it's got me thinking about things I hadn't before (:

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Bad_DNA t1_jacciye wrote

Closing those accounts won't solve the issue, but it'll take away a method of self-harm. Behavior modification is the only way. Your mental challenge is something you will successfully manage, and your finance, too. Not knowiing the terms of your bank accounts (are there annual fees -- sure, close the accounts AFTER they are paid in full and request that the accounts be marked as 'Account closed at consumer's request'. Keep the longest/oldest fee-free card open.

Budget. Sell your stuff. Cancel all of your subscriptions. Get a roommate or 3. Automate the bill payments so you aren't late again and make at least the minimum (but pay more with the money you make from selling your stuff to the highest interest rate. Read the wiki on managing money. Chime or other programs don't do magic. You can do the work without Chime. They are not a bank, but a 'financial technology company'. While they advertise no fees -- how do they make money? You can do this on your own.

Edit -- changed my description of mental situation to something more accurate. Most 'mental illness' isn't an illness. Largely, it is a way of coping or thinking/behaving different that has been labeled by some people to differentiate 'us' from 'them'. When in fact, we are all 'thems'.

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fishonthesun OP t1_jacpfqu wrote

Thank you for the support and reassurance (:

As far as roommates go- it's something I'll look into for the future if my situation doesn't improve enough to go without them. I'm really hesitant to do it though- my mental health has always taken a huge dive whenever I've lived with someone else. Even though I'm still a bit depressed at the moment, I haven't been as happy as I am now since I was like... 7 years old. Plus, if I get a/some roommate/s, and I get severely depressed again, I'll end up working a lot less and probably be in the same, if not worse, situation. Plus, I would have to break lease early to move out and get roommates, and that's not an option atm- no savings. BUT I'm not trying to dismiss thos out of hand- I'll give it serious consideration in the future.

As far as selling stuff goes, I've sold what I can, but a majority of the items I've tried to sell are only valuable to me. Getting rid of them doesn't solve anything and selling them just isn't happening, although I will keep trying at it.

Thanks again!

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goblueM t1_jacd8i7 wrote

Simplicity may help you a little. Changing your behavior and paying off your debts will help your credit score

Changing banks won't really do anything. That's sort of like saying eating your dinner in the basement instead of the kitchen will help you lose weight

Your biggest issue is not how many bank accounts you have, it's the fact that you are not making enough money to pay your credit card off.

Ideas to research:

transferring CC to a 0% balance introductory offer card, if you can find one and get approved

forbearance for student loans for a year until you can clear the credit card debt

Not sure if you qualify, but you could look into Michigan energy assistance program https://www.michigan.gov/mpsc/consumer/energy-assistance

getting a roommate

moving back in with parents, if possible

picking up extra hours or a side gig and putting all that money toward the CC debt

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fishonthesun OP t1_jackv1z wrote

Okay, these are great options, thank you! For moving back in with parents, I'd have to abandon my whole life and be miserable- my home town is a place where a lot of trauma happened to me, and my PTSD symptoms increase dramatically as do my depressive symptoms while I'm there longer than a weekend.

Everything else you've suggested is worth looking into, thank you! I'll be screenshotting your comment so I don't forget, haha

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Ok_Cap_408 t1_jach3wg wrote

Do you have access to resources designed to help you cope with your mental health challenges? If not doing so could make your life a lot easier. Speaking of resources is it possible for you to get access to some sort of low-income housing due to your diagnosis? If yes this could reduce your monthly overhead and potentially provide you with increased stability. In terms of Chime, it sounds like nonsense and I would avoid it. If possible I would sell your car and ideally use the money you would spend on car payments to pay off your credit card debt and then once that is paid off pay off your student loans. Going forward I would stick to debit cards. I like the idea of reducing the amount of bank accounts you have but I would go with a more stable option instead.

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fishonthesun OP t1_jackhsd wrote

I do have a therapist and a psychiatrist, as well as a fantastic support system, so those bases are covered, it's more of a "doing the things I need to do to improve my mood and wait for the depressive episode to gradually lift" thing.

Unfortunately selling my car isn't an option- 30 mile commute to my job, no public transport to get me there. Plus, it's not in great shape right now and wouldn't get me enough money to get a car other than one that would be in the shop all the time and cost me more over time than just keeping my current one.

I have been thinking of getting rid of the credit card once it is paid off, that's probably what I'll do. Making loan payments is how my credit score got to 735 in the first place, and I've unfortunately demonstrated credit cards are a bad option for me, at least at this point in my life.

As far as low income housing, I did apply for all the places near me, and didn't hear back from any of them despite multiple, multiple attempts to get a hold of them.

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Ok_Cap_408 t1_jacl6re wrote

It is good that you have access to a therapist, a psychiatrist, and a fantastic support system. If you can get access to welfare it could potentially increase your chances of accessing low-income housing. Not to mention extra income would make your life easier financially. Plus you could also ask your service providers and or support system to write testimonials on your behalf advocating for you to access low-income housing.

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fishonthesun OP t1_jacopx5 wrote

I will look into what you said about getting welfare- not something I would have thought of on my own.

Thanks a bunch!

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